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| Surfing — and recruiting — for
cash |
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| ‘Pay-for-surf’ plans give users
money for watching Web ads and signing up their friends to do the same |
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By
Bob Sullivan
MSNBC |
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| Oct. 6 — You might not be terribly interested in
getting paid 50 cents an hour to watch ads while surfing the Net — hardly a living
wage. But what if you were paid a nickel, or a dime, for every hour thousands of other
people surfed? It adds up to hundreds or even thousands of dollars per month. The pitch
has romanced millions of Net users into signing up since April and has start-up
AllAdvantage.com in the Web’s top 25 list almost overnight. Over a dozen companies
are rushing to follow. Can Web users really get money for nothing? |
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WHILE NET USERS are still skeptical of proliferating offers for free
PCs or free Internet access, “pay-for-surf” companies go a step further. In
perhaps the logical conclusion of the Internet’s gold rush to gain market share at
any cost, several companies are giving money away to attract users.
It’s simple, really — surrender part of your computer
as advertising space, and you’ll be paid about 50 cents an hour for your time.
It’s not the first scheme to entice Net users to browse ads with some kind of
compensation; Cybergold.com gives users Net coupons for looking at ads. But it is the
first time consumers are being sent cold, hard cash.
Most services cap your monthly payout at about $20, enough to
cover the cost of your Internet connection. But that’s hardly what has generated all
the excitement.
Members are flocking to the services because of additional
payouts offered by an Amway-style mutlilevel marketing scheme that allows users to sign up
friends and gain a chunk of their surfing earnings. And still more chunks from every hour
surfed by people the friends get to sign up — and so on. Even at a nickel an hour,
with no limit on referrals, it can add up. |
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Part of the AllAdvantage ad viewer, which usually sits at the bottom of a user's
computer screen.
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Dale
Martin signed up for AllAdvantage.com almost immediately after the service launched March
30. Telling a couple of friends at his church and sending out a few e-mails created a
snowball. He now has 29 “direct” referrals and 3,986 extended referrals. He
earned $24 in July, the first month the service paid its users, $193 in August and $487 in
September.
“I’m going to buy a new computer, a Pentium III, with
the money. My wife can’t complain about that,” he said. “If I’d have
known this would happen, I would have spent more time on it at the beginning.”
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AllAdvantage has already sent out a dozen
checks of more than $1,000, according to CEO Jim Jorgenson, with that number expected to
increase exponentially next month.
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Martin is hardly AllAdvantage’s best customer.
According to CEO Jim Jorgenson, the company has already sent out a dozen checks of more
than $1,000, with that number expected to increase exponentially next month.
The near-magical mixture of “word-of-mouse” publicity
with the lure of multilevel marketing riches has made “pay-for-surf” the latest
Internet phenomenon. AllAdvantage says it has 2.5 million users, and the company’s
5-month-old Web site cracked the top 25 on the Net in August, according to PC Data, just
ahead of iVillage and CDNow. Most are users feverishly checking their account balances.
Closest competitor GotoWorld.com says it just surpassed the 1
million mark, and its site was ranked 53rd in August.
All that has attracted the attention of private investors.
AllAdvantage just completed a $31 million round of funding, with cash kicked in by Times
Mirror TMCT Ventures and Walden Media.
With $1,000 checks flying out the door toward millions of
members, one might think that $31 million would dry up quickly. Not so, Jorgenson says.
The complicated mathematics of an MLM pyramid work because AllAdvantage won’t pay out
more than 80 cents an hour, including 50 cents to the surfer and a maximum of 30 cents for
five levels of referral surfers (10 cents for the first level, 5 cents each for four more
levels). That works out to $4 for every 1,000 ads the company serves — a maximum
unlikely to be reached.
“We’re very profitable at a $5 CPM rate,” he
said, explaining the company’s business model. He wouldn’t disclose the
company’s current rates, though he said they are slightly lower than standard Net
fees, which can range anywhere from 15 to 80 CPM — or $15 to $80 per 1,000 ads
served.
But that presumes advertisers are dumping money into the system
as fast as users are getting paid out of it. So far, Internet posts indicate GotoWorld
users have been disappointed because that company only managed to sell ads at an average
of $2 per thousand, and the first round of checks the company sent out only paid about 7
cents per hour of surfing.
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Lining up advertisers fast enough so the pyramid
doesn’t topple is a challenge, Jorgenson admits.
“We get members at Internet speed, and we sell ads over
the phone,” he said. “We have 20 people selling ads right now. By January,
we’ll have 100.”
The potential for such a topple, caused if membership far
outpaces advertising revenue, becomes even more real as new players enter the space. There
are now nearly 20 announced pay-for-surf programs, though only GotoWorld and AllAdvantage
have thus far sent checks to users.
Naturally, users of the services have a vested interest in
their success, and have created communities on their own to promote them. Rick Patton, who
signed up for AllAdvantage on the first day, maintains a Web forum with information on all
the services that gets 300,000 hits a month. In September, he received a $306.53 check
from AllAdvantage.
“I feel very loyal to them. They’re sending me
money,” he said. He’s trying to get the company to set up an online mall so his
forum users can buy products from AllAdvantage advertisers. “If we’re going to
spend money anywhere on the Net we want to be sure to direct it at an AllAdvantage
sponsor.”
That kind of loyalty may be the envy of traditional advertising
publishers, but it can’t change some of the fundamental challenges of marrying
multi-level marketing and the Internet. For one, hackers have already written tools to
trick the service into getting credit for extra hours of surfing (companies say they
terminate such accounts immediately). There have also been complaints that pay-for-surf
programs slow surfing down, since they require near constant communication with an ad
server.
Then there’s debate over just how valuable
“paid” advertising views really are. |
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“The problem with paying cash is it
lowers the quality of the user to the advertiser.”
— ROB ENDERLE
Giga Information
Group analyst |
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“This goes to show people can be bribed to watch
advertising,” said Rob Enderle, an analyst with the Giga Information Group. “The
problem with paying cash is it lowers the quality of the user to the advertiser.” For
starters, desirable high-income Net users are unlikely to be attracted by any money-making
schemes. And mass audiences who merely tolerate ads for pay are far from the holy grail of
direct marketing, he said. “Advertisers want hot leads.”
There’s also a lot of well-founded skepticism from
consumers about any pyramid scheme. According to Claudia Bourne Farrell, a spokeswoman for
the Federal Trade Commission, “pay-for-surf” programs don’t appear to have
the elements of a pyramid scam, since users don’t have to pay any fees to join. But
the programs are not completely free, either.
“What you do give up is your personal information. For
some people, privacy is a more valuable commodity than others,” she said. |
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Lining up advertisers fast enough so the
pyramid doesn’t topple is a challenge.
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Then there’s the saturation point, which all
pyramids eventually reach. While it’s profitable to get in at the beginning, with
hundreds of referrals trailing behind, users who sign up later will have a much harder
time building broad tentacles of referrals. While that’s true, says GotoWorld CEO Ian
Simpson, the power of the Internet puts the saturation point far into the future.
“It’s not limited to a geographic or demographic
market as you are in a classic MLM,” he said. None of the services yet pays surfers
outside the U.S. “We’re talking about no boundaries. We will not hit the
saturation point for a long time because it’s growing every day.”
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